Market News

The UK unemployment rate has fallen unexpectedly to its lowest level since last summer as inactivity in the jobs market increases and vacancies tumble, according to official figures.

The Office for National Statistics (ONS) said the rate of UK unemployment dropped sharply to 4.9% in the three months to February, down from 5.2% in the three months to January and lowest since August last year.

Most economists had expected the jobless rate to remain unchanged.

The ONS said the fall was driven by a rise in inactivity, especially among students, which lifted by 70,000 in the quarter.

The figures also showed average regular wage growth dropped further, to 3.6% in the three months to February, down from 3.8% in the previous three months and remaining at the lowest level since November 2020.

Earnings are still outstripping inflation, rising by 0.4% with the Consumer Prices Index (CPI) taken into account, but this is the lowest real growth for more than two-and-a-half years.

Vacancies also plunged by 29,000 to 711,000 in the three months March – now the lowest level since April 2021.

Liz McKeown, ONS director of economic statistics, said: “Alongside falling unemployment, the number of people not actively seeking work increased, with data suggesting fewer students seeking work alongside their studies.

“Regular wage growth has slowed further with growth at its lowest rate in over five years.”